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Canada Prompt Payment Act reaches second reading in the Senate

Ottawa, Ont. - A bill has been introduced in the Senate that would ensure contractors and sub-contractors on federal construction projects are paid promptly.

According to a release from Manitoba Senator Don Plett, Bill S-224, the Canada Prompt Payment Act was introduced at second reading in the Senate on April 19. First reading took place April 13.

"As a former trade contractor, I know that in the construction industry, it is a tolerated practice that there are no strict timelines for payment, even when all parties are satisfied with the work completed," Plett said in a statement. "Delay in payment is the number one reason small and medium-sized businesses in the construction industry are going out of business in Canada."

The legislation only covers contracts and the sub-contracts of those contracts with the federal government, the release makes clear — all other construction projects fall under the purview of the respective provinces and territories.

Bill S-224 "ensures that the government institution must make progress payments to a contractor on a monthly basis, or at shorter intervals provided for in the respective contract. This payment requirement is consistent down the contractual chain," the release reads.

It also accounts for milestone payments and stated contractors have the right to suspend work, terminate a contract and collect interest on late payment.

"Senator Plett has been a champion on this issue for our industry on Parliament Hill over the last several years. He is from our industry and he gets it," said John Galt, chairman of the NTCCC. "This is a tremendous opportunity for Canada to join virtually every other country in the Western world that has some form of prompt payment legislation in place to address this worldwide problem."

This news follows a prompt payment summit that was held earlier this week, the release states, where

stakeholders and parliamentarians discussed ways to move forward on prompt payment legislation at the provincial and territorial level. Senators and members of parliament, including cabinet ministers, were in attendance, offering their support.

"After years of working with industry stakeholders on a solution to this problem, I am thrilled that we have a great piece of legislation before us," stated Senator Plett. "I look forward to the swift passage of this bill and I am hoping the Canada Prompt Payment Act will give the provinces the momentum they need to move forward on this at the provincial level."

Patrick Brown, leader of the opposition for the PC Party in Ontario, also recently commented and endorsed Bill S-224.

"There are 400,000 Ontarians earning their living in the construction industry, yet many of the small and medium-sized family-owned contractors who employ these people are not getting paid for several months after the fact for completed construction work," he said. "If you do the work, you should get paid."